Many travel bloggers have these extensive calculations they have created to figure out the best value for a points/miles redemption. Some of them I have found to be very helpful, but others are way more confusing than they need to be. Unless you are trying to squeeze every last penny that you can get from an airline or hotel, you may end up wasting more time finding a good deal than what is worth the effort. It all comes down to how good of a deal you want to get. In light of a friend asking for help with this recently, I want to share a very basic calculation that you can use to find out if you are getting a reasonable point redemption value.
So here is the basic formula:
Take the Dollar Value Of Flight/Room/etc. and divide that by the Total Number of Points/Miles For An Award Redemption.
That will give you the cost per mile or point. Then take that number and compare it to what the average valuation is for that reward program (Google SkyMiles valuation, for example, to find out). If the cost per mile is equal to or higher than the current valuation, then you can feel comfortable booking. If the cost per mile is any less, then you are losing money essentially should avoid the redemption and look into alternatives for booking and getting the best value.
Here’s my friend’s example:
Cost of the flight is $1550. The Delta SkyMiles award cost is 85,000 miles. Enter this in to the formula: 1550/85000 = .018 or 1.8 cents per mile. The value of SkyMiles is about 1.2 cents per mile at the time of writing, so this is an OK redemption. Definitely not the most amazing value that can be found, but she is not going to be losing out on anything by booking this trip.
On the contrary, I had a friend book a 3 night stay at a Hilton in New Orleans. Rooms were going for around $120 a night or 40K points. His valuation: 360/ 120,000 = .003 or about a third of a cent per point, which is less than the .004 Hilton points are valued at. Don’t be him.
If you have some flexibility, try searching flexible dates, because award redemptions can fluctuate quite a lot. There are so many potential combinations and options on how to plan and book your travel, so if you find something you feel comfortable with for your situation go ahead and book!
So there you have it, a simple way to find out if your award booking is a good deal or not. Hope this helps you in your future travel!
